Explained: The Impact Of Indian Govt Bonds Inclusion In The JP Morgan Index

The Indian government debt market stands at a cornerstone of the nation’s financial landscape, serving as a vital avenue for raising capital and facilitating investment. Understanding its size and constituent elements provide crucial insights into the broader economic landscape and investment opportunities. Of late, fixed income has been gaining traction amongst all retail investors amid the announcement of inclusion of Indian government bonds in JP Morgan and Bloomberg Global Emerging Market Indices and S&P upgrading India’s credit rating outlook to ‘positive’ from ‘stable’. JP Morgan has said that 29 government bonds under the fully accessible route meet its criteria for inclusion on the Government Bond Index – Emerging Markets suite on Friday, June 28. The 7.04%, 2029 bond and the 7.02%, 2031 bond have been added to a list of 27 bonds listed in a client note earlier this month. Indian government bonds will be included on the Global Diversified Index with a one per cent weight on Friday, rising to a maximum of 10 per cent in a staggered manner by March 2025. Bonds with an outstanding duration of over 2.5 years and face value of over $1 bln are eligible for index inclusion. While market value will be calculated during the inclusion, the 7.18%, 2033 bond is likely to have the highest individual weight. According to Reserve Bank of India data, index-eligible bonds with 0-5 years of maturity have an outstanding of 6.29 trln rupees, with 5-10 years maturity having 15.42 trln rupees of outstanding and with greater than 10 years maturity having 13.18 trln rupees of outstanding. Join BTTV Managing Editor Siddharth Zarabi in conversation with Vishal Goenka, Co-Founder of IndiaBonds.com. Goenka shares his insights on the debt market, types of fixed income instruments, future expectations, and more. He mentioned that $25-30 billion in inflows are expected with the inclusion of Indian government bonds in the JP Morgan EM Bond Index.